Russia’s Skolkovo Innovation Centre To Audit Every Resident Company

Following corruption allegations, Skolkovo Foundation will scrutinise every single company that resides in the ‘Russian Silicon Valley’

In a bid to spruce up its ever-growing project portfolio, the Skolkovo Foundation has leaked to the press the plans to weed out ‘bad’ residents.

In an exchange with the Russian business daily Vedomosti, Alexei Beltyukov, Skolkovo’s senior VP for development and commercialization, said that the Foundation, which runs the state-sponsored Skolkovo innovation hub (still under construction on the outskirts of Moscow), has voted for an across-the-board inspection of its residents. Subject to scrutiny are 184 companies that have received a total of 9 billion rubles (£196 million) in Skolkovo grants, as well as the remaining 648 that enjoy tax privileges.

Getting your house in order

The move aims to gradually weed out corporate residents that show little or no innovation activity, along with any companies which may simply be taking advantage of their residency status and the ensuing tax benefits to help finance non-core business. According to Beltyukov, such residents may make up as much as 7 percent of the total. He adds that “if we were initially focused on reaching a critical mass of companies, we’re now shifting from numbers to quality.”

The actual proportion of resident companies whose activities may be questionable might be significantly higher than Beltyukov’s estimated 7 percent. A few months ago, citing unnamed sources at the Foundation, the Russian newspaper RBC Daily reported that such companies could comprise more than half of the total number of Skolkovo residents. This estimate was denied by a Skolkovo official interviewed by East-West Digital News.

Companies that don’t qualify for renewed residency are likely to lose their status, while any companies found to be siphoning grant funds intended for innovation to finance side projects will be brought to justice, the senior vice president warned.

In late 2012, the Foundation instituted an account management system to monitor residents’ activity. Coupled with the residents’ self-reporting, the system has already helped check about 50 companies, Beltyukov explained, with three of those “identified for contract termination.”

The change of strategy comes on the heels of the most recent embezzlement scandal involving high-ranking Foundation officials. Acting on a tip-off from the Foundation itself, the Investigative Committee of Russian Federation is reported to have pressed charges earlier this month against Kirill Lugovtsev, the ex-chief of Skolkovo’s finance department, and Vladimir Khokhlov, the CEO of the Foundation’s customs and finance service. The two have been identified as the prime suspects in an alleged misappropriation of 23.8 million rubles (about $790,000) allotted for Skolkovo’s development.

In the autumn of last year, Russia’s Audit Chamber found that out of the 31.6 billion rubles (more than $1 billion) allocated by the Russian government, the Skolkovo Foundation had only granted its residents 18.9 billion rubles ($630 million), which, when combined with either insufficient or non-existent KPIs or timeframes for each specific project, might suggest “credibility risks” regarding the efficacy of the use of government funds.

Beltyukov explained to Vedomosti that “more than 60 percent of the Foundation’s budget is being spent on Skolkovo’s construction.” He also highlighted that Skolkovo had settled a liability of 3.8 billion rubles ($126 million) even as the Audit Chamber continued its inspection.